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SadisGoldberg LLP
S&G INVESTMENT MANAGER Alert
Edited by Yelena Maltser • ymaltser@sglawyers.com
MARCH 2017

SUPREME COURT REJECTS NEWMAN REQUIREMENT OF “PECUNIARY OR SIMILARLY VALUABLE” PERSONAL BENEFIT FOR INSIDER TRADING LIABILITY FOR TIPPING FAMILY AND FRIENDS

BY SAMUEL J. LIEBERMAN

The U.S. Supreme Court gave the government a major victory in Salman v. U.S.,1 which lowers the standard for proving insider trading involving tipping family or friends, and will embolden the government to bring similar cases. Salman holds that a gift of inside information to a family or friend is sufficient to prove insider trading tipping liability—even if the tipper did not receive a valuable quid pro quo in exchange for the tip. This significantly narrows U.S. v. Newman, in which the Second Circuit (a lower appellate court) held that a tipper must receive “at least a potential gain of a pecuniary or similarly valuable nature,” (continued on page 2)

Salman will almost certainly embolden the SEC and federal prosecutors to bring more insider trading cases, because it is much easier for the government to prove a “gift” to a “friend” than to prove a “pecuniary” or similar quid pro quo.

Client Alert
Status of the New DOL Fiduciary Rule
BY DANIEL G. VIOLA
Reprinted with permission of Hedgeweek

The Department of Labor’s (the “DOL”) new fiduciary ruling (the “Rule”) has created strife in the securities industry and has the potential to significantly impact how financial advisers and brokers will manage retirement accounts in the future.

Currently, brokers, financial advisers, and other finance professionals do not legally have to act in a client’s best interest, with few exceptions, such as those who are registered as investment advisers with the U.S. Securities and Exchange Commission or in individual states. Those who are not registered, like brokers, just have to prove that the investment is suitable, not necessarily the best option, for their client—no matter that that fund might be more expensive and provide (continued on page 2)

Inside this Issue
1 Supreme Court Rejects Newman Requirement of “Pecuniary or Similarly Valuable” Personal Benefit for Insider Trading Liability for Tipping Family and Friends
1 Status of the New DOL Fiduciary Rule
4 A Cautionary Tale in the Use of Non-Compete Agreements
5 The Question On All Of Our Minds: What Impact Will the Trump Administration Have on the Hedge Fund Industry?
6 Compliance Deadlines – Second Quarter 2017
7 SEC & FINRA Release 2017 Exam Priorities
7 Gregory Hartmann Joins Sadis & Goldberg’s Corporate and Financial Services Practices
8 Recent and Upcoming Events

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